Buying a retirement home in Costa Rica using 401k money

[Rob Pattison]

I'd like some advice on the wisdom of using $100k of my 401k money to buy a retirement home in Costa Rica.

The facts:  I'm 57 years old and live in Hermosa Beach, where I rent an apartment.  The houses here are $2 million and up.  I enjoy surfing and love living walking distance to the ocean.  I would like to own a home near the ocean where I don't have to worry about sharing walls with people, and where I can grow my own garden.

I've found out that through my employer's 401k plan, that I now can take up to $100k out penalty-free (but not tax free) as a COVID exception.  I can buy a house near the beach in Costa Rica for about that amount of money.  I visited Costa Rica 2 years ago and loved the country and the people.  They are a 5 and 1/2 hour direct plane flight away and 1 hour removed from CA time.

I plan on visiting the country in December for about a month.  Costa Rica opened up the country to Californian's on October 1st.  I'd like to visit the whole country with the goal of buying a house if one comes my way with my criteria.  If I see no houses, I wouldn't buy just to buy.

My plan would be to live in the house periodically in the short term (maybe 1 to 2 weeks every month) and Air B & B it when I'm not there.  I have a sales job in the chemical industry where I've been employed 17 years that I can run remotely for a week to a month at a time.   I've been buying non-performing notes, which I can also manage anywhere I can get an internet connection.

I'm interested in hearing the pros and cons and feedback from anyone contemplating doing what I've done, or who has done it.